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May 10, 2005
More than 730,000 people in the United States filed compensation claims for asbestos-related injuries from the early 1970s through the end of 2002, costing businesses and insurance companies more than $70 billion, the RAND Corporation reported today.
Claimants have received about 42 cents of every dollar spent on asbestos litigation, according the new study by the RAND Institute for Civil Justice. Another 31 cents has gone to defense costs, and 27 cents has gone to plaintiffs' attorneys and other related costs. The research notes that there is no published research comparing the compensation received by asbestos plaintiffs with their economic losses.
Asbestos is a group of silicate minerals used in many industrial processes because of their fire-retardant properties. Asbestos fibers, which are easily inhaled, can cause a number of injuries including a fatal, incurable cancer called mesothelioma. Asbestos can also impair lung function without causing cancer.
Researchers said the number of asbestos claims has increased sharply through the 1990s and into 2002, driven primarily by people who claim non-cancerous injuries. These cases now account for 90 percent of all new claims, according to the study.
“We found that the cost of asbestos claims continues to increase at a steady pace,” said Stephen J. Carroll, a RAND senior economist and lead author of the study.
The number of claims made by people with mesothelioma has increased sharply in recent years – doubling during the period from 1994 to 2002. However, cases based upon mesothelioma remain a small proportion of all asbestos claims.
Researchers said an increasing share of the claims are being brought by workers exposed in industries such as textiles, paper, glass and food — where workers did not routinely handle asbestos, but asbestos was present in the workplace. Previously, most claims were from workers exposed through activities such as asbestos mining and manufacturing.
The litigation is concentrated in eight industries, but at least one defendant company can be found in 75 out of the 83 different industries that make up the two-digit Standard Industrial Classification, a system designed by the U.S. Department of Commerce to help group companies within categories.
Some evidence suggests that most of the non-cancerous claimants have not suffered an injury that has so far affected their ability to perform daily activities, although they may show symptoms such as lung abnormalities that suggest an asbestos injury has occurred.
The study also found at least 8,400 entities had been named as defendants in asbestos claims through 2002. At least 73 companies named in a substantial number of asbestos claims filed for bankruptcy through mid-2004, researchers determined. The trust funds created following the bankruptcies of asbestos manufacturers and other major asbestos defendants pay only a small fraction of the agreed-upon value of individual's claims against those defendants.
RAND researchers summarized several proposals that have been put forth as alternatives to the current system, including one that would allow claims to remain in the legal system, but limit compensation only to those people whose injuries meet certain medical criteria. Such a system would require the fewest changes, but it would prevent many asbestos-exposed workers from seeking compensation.
Another proposal would create a universal trust fund to make payments to injured workers who meet certain criteria, including medical criteria, by pooling payments from defendant corporations and insurers. But such a proposal must address difficult issues such as how much is needed to pay future claims and how much each contributor should pay, according to researchers.
Since 1983, researchers from the RAND Institute for Civil Justice have studied asbestos litigation, publishing a series of reports that have documented the growing cost and number of asbestos injury cases.
For the latest report, RAND researchers gained access to confidential data gathered by a large number of individual defendants, insurers, and plaintiff and defense attorneys. They also reviewed court records and interviewed more than 60 key participants, including plaintiffs' attorneys, corporate counsel, outside defense attorneys, insurance companies, investment analysts and court-appointed neutral participants.
In addition to Carroll, other authors of the study are: Deborah Hensler, a RAND consultant, professor at Stanford University Law School, and former director of the RAND Institute for Civil Justice; Elizabeth Sloss, Matthias Schonlau and J. Scott Ashwood, all of RAND; and Jennifer Gross and Allan Abrahamse, RAND consultants.
The RAND Institute for Civil Justice helps make the civil justice system more efficient and equitable by supplying government leaders, private decision makers and the public with the results of objective, empirically based, analytic research.
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